Year-on-year headline inflation decelerated slightly to 2.9 percent in May from 3.0 percent in April, well within the BSP’s forecast of 2.5-3.4 percent for the month. This brought the year-to-date (ytd) average inflation to 3.0 percent, which is at the low end of the Government’s inflation target range of 3-5 percent for 2012. Meanwhile, core inflation, which excludes certain food and energy items to measure generalized price pressures, rose slightly to 3.7 percent in May from 3.6 percent in April. Core inflation averaged 3.5 percent for the first five months of the year.
The slightly lower May headline inflation was due largely to slower increases in the prices of non-food items, particularly housing, water, electricity, gas, and other fuels, and transport. Lower charges for household electricity rates and downward price adjustments for LPG, kerosene, gasoline, and diesel pushed down non-food inflation. Meanwhile, food inflation held steady as price increases in rice and sugar were offset by lower prices of fish, vegetables, fruits, oils and fat, and meat.
Governor Amando M. Tetangco, Jr. noted that the lower inflation reading in May is consistent with the BSP’s assessment of a manageable inflation outlook over the policy horizon, with average inflation likely to settle well within the 3-5 percent target range. He assured that the BSP will continue to closely monitor price and output developments to ensure that monetary policy settings remain consistent with the price stability objective while being supportive of balanced and sustainable growth.